WASHINGTON — Rampant intellectual property theft in China and Russia is undermining the free trade policies of the Bush Administration, U.S. Sen.
Orin Hatch (R-Utah) said today.
As a Chinese trade delegation prepares for a Washington summit with
officials of the United States Trade Representative (USTR), Hatch spoke at a
Senate Judiciary subcommittee hearing on piracy with a clear message to
Beijing and Moscow.
“Various analyses indicate that piracy levels in many sectors are close to
or exceed 90 percent in China,” Hatch said. “In Russia, overall losses to
copyright-related industries have continued to increase and are, in my
opinion, at unacceptable levels.”
For proof, Hatch pointed to a recent USTR report that placed China on the
United States’ Priority Watch List for intellectual property theft. Beijing
joined Russia and 12 other trading partners that Washington says are not
effectively protecting or enforcing intellectual property rights (IPR).
According to the Business Software Alliance (BSA), software piracy in the
Asia-Pacific region cost manufacturers close to $8 billion in 2004. Worldwide,
losses due to software piracy were estimated at more than $32 million.
The BSA puts piracy rates in China at 90 percent and Russia at 87 percent.
BSA President Robert Holleyman told the Senate panel that in 1996 China was
the world’s sixth largest market for personal computers and the 26th largest
for software. Today, China is the second largest market for personal
computers but is still only 25th in software.
“This growing gap between hardware and software sales is the inevitable
consequence of a market that does not respect intellectual property rights
or reward the significant investment required to develop and market
innovative software products,” he said.
Holleyman characterized the situation in Russia as “mixed,” noting recent
cooperation by Moscow in drafting new anti-piracy laws. Internet piracy,
though, remains unchecked.
“Internet piracy is one piracy challenge in Russia where industry efforts
have met with little success in the past few years,” Holleyman said. “The
business software industry faces a persistent problem of pirated software
promoted and sold all over the world using unsolicited e-mail advertisements
and delivered via mail order.”
“A well-connected, sophisticated Russian criminal network in Moscow,”
Holleyman claimed, runs these “spam and scam” operations.
Mary Beth Peters, Register of Copyrights at the Library of Congress, added
that “sketchy” information indicates a “series of rumored ties” between
pirating operations and terrorist organizations.
“Among many problems in Russia is the fact that, of the pirated goods that
are confiscated by law enforcement, 70 percent get returned to the market,”
Sen. Patrick Leahy (D-Ver.) noted. “Meaningful enforcement needs to involve
more than a revolving door.”
In his opening comments, Hatch cited an oft-used phrase about the former
Soviet Union’s negotiating style: “What’s mine is mine and what’s yours is negotiable,” he said.
Hatch warned that if China or Russia attempts to adopt that view, “I can
assure you that public support for U.S. trade agreements will be
He added, “There will be strong resistance from and appropriate action
taken by — members of Congress.”